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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Biostar Pharmaceuticals Inc (CE) | USOTC:BSPM | OTCMarkets | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.0001 | 0.00 | 01:00:00 |
x
|
Quarterly Report Pursuant To Section 13 Or 15(d) Of The Securities Exchange Act Of 1934
|
¨
|
Transition Report Pursuant To Section 13 Or 15(d) Of The Securities Exchange Act Of 1934
|
Maryland
|
20-8747899
|
|
(State or other jurisdiction of incorporation of origination)
|
(I.R.S. Employer Identification Number)
|
No. 588 Shiji Xi Avenue
Xianyang, Shaanxi Province
People’s Republic of China
|
712046
|
|
(Address of principal executive offices)
|
(Zip code)
|
Large accelerated filer
¨
|
Accelerated filer
¨
|
||
Non-accelerated filer
¨
|
Smaller reporting company
x
|
Page
|
||
PART I
|
FINANCIAL INFORMATION
|
|
Item 1.
|
F-1
|
|
Item 2.
|
3
|
|
Item 3.
|
10
|
|
Item 4.
|
10
|
|
PART II
|
OTHER INFORMATION
|
|
Item 1.
|
11
|
|
Item 1A.
|
11
|
|
Item 2.
|
11
|
|
Item 3.
|
11
|
|
Item 4.
|
11
|
|
Item 5.
|
11
|
|
Item 6.
|
12
|
|
13
|
Page(s)
|
|
Financial Statements
|
|
F-2
|
|
F-3
|
|
F-4
|
|
F-5
|
BIOSTAR
PHARMACEUTICALS
, INC
|
||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||
AND COMPREHENSIVE (LOSS) INCOME
|
||||||||
(Unaudited)
|
||||||||
Three Months Ended March 31,
|
||||||||
2014
|
2013
|
|||||||
Sales, net
|
$ | 13,181,164 | $ | 12,091,909 | ||||
Cost of sales
|
5,928,076 | 5,403,019 | ||||||
Gross profit
|
7,253,088 | 6,688,890 | ||||||
Operating expenses:
|
||||||||
Advertising expenses
|
1,788,541 | 1,886,681 | ||||||
Selling expenses
|
1,934,722 | 2,197,346 | ||||||
General and administrative expenses
|
3,597,993 | 1,077,748 | ||||||
Research and development expenses
|
694,944 | 796,001 | ||||||
Total operating expenses
|
8,016,200 | 5,957,776 | ||||||
Income (Loss) from operations
|
(763,112 | ) | 731,114 | |||||
Other income (expense)
|
||||||||
Interest income
|
316,431 | 455,231 | ||||||
Interest expense
|
- | (95,688 | ) | |||||
Other income
|
1,099,292 |
-
|
||||||
Other expense
|
(46,700 | ) |
(2,098
|
) | ||||
1,369,023 | 357,445 | |||||||
Income before income taxes
|
605,911 | 1,088,559 | ||||||
Provision for income tax
|
299,241 | 527,585 | ||||||
Net income
|
$ | 306,670 | $ | 560,974 | ||||
Other comprehensive income - f
oreign currency translation adjustment
|
(533,979 | ) | 437,833 | |||||
Comprehensive income (loss)
|
$ | (227,309 | ) | $ | 998,807 | |||
Net income per share
|
||||||||
Basic
|
$ | 0.02 | $ | 0.06 | ||||
Diluted
|
$ | 0.02 | $ | 0.06 | ||||
Weighted average number of common shares outstanding
|
||||||||
Basic
|
13,024,446 | 9,993,549 | ||||||
Diluted
|
13,030,643 | 9,993,549 |
BIOSTAR
PHARMACEUTICALS
, INC
|
||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
(Unaudited)
|
||||||||
Three Months Ended March 31,
|
||||||||
2014
|
2013
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||
Net income
|
$ | 306,670 | $ | 560,974 | ||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Accrued interest
|
(314,489 | ) | (449,075 | ) | ||||
Deferred ta
x expense (benefit)
|
(137,124 | ) | 360,387 | |||||
Depreciation and amortization
|
736,124 | 458,931 | ||||||
Provision for doubtful accounts
|
2,269,688 | - | ||||||
Recognition of deferred research and development expenses
|
694,943 | 796,001 | ||||||
Stock-based compensation
|
99,550 | 6,147 | ||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(3,450,423 | ) | 5,457,403 | |||||
Inventories
|
91,423 | (562,015 | ) | |||||
Deposits and other receivables
|
1,396,128 | (764,161 | ) | |||||
Accounts payable and accrued expenses
|
963,311 | 507,140 | ||||||
Value-added tax payable
|
104,737 | (170,796 | ) | |||||
Income tax payable/recoverable
|
343,723 | (21,547 | ) | |||||
Net cash provided by operating activities
|
3,104,261 | 6,179,389 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Purchase of property, plant and equipment
|
(1,957 | ) | (4,352 | ) | ||||
Net cash (used in) investing activities
|
(1,957 | ) | (4,352 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Advance from (repayment to) a related party
|
107,692 | (1,592,002 | ) | |||||
Proceeds from stock issuance
and warrants
|
3,862,533 | - | ||||||
Net cash provided by
(used in)
financing activities
|
3,970,225 | (1,592,002 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents
|
(20,043 | ) | 115,013 | |||||
Net increase in cash and cash equivalents
|
7,052,486 | 4,698,048 | ||||||
Cash and cash equivalents, beginning balance
|
80,072 | 1,759,078 | ||||||
Cash and cash equivalents, ending balance
|
$ | 7,132,558 | $ | 6,457,126 | ||||
SUPPLEMENTAL DISCLOSURES:
|
||||||||
Interest received | $ | 1,943 | $ | 6,945 | ||||
Interest (payments)
|
$ | - | $ | 93,132 | ||||
Income tax (payments)
|
$ | 92,641 | $ | 188,745 |
o
|
Shaanxi Biostar has the full right to control and administer the financial affairs and daily operation of Aoxing Pharmaceutical and has the right to manage and control all assets of Aoxing Pharmaceutical. The registered owners of Aoxing Pharmaceutical as a group have no right to make any decision about Aoxing Pharmaceutical’s activities without the consent of Shaanxi Biostar.
|
o
|
Shaanxi Biostar is assigned all voting rights of Aoxing Pharmaceutical and has the right to appoint all directors and senior management personnel of Aoxing Pharmaceutical. The registered owners of Aoxing Pharmaceutical possess no substantive voting rights.
|
o
|
Shaanxi Biostar is committed to provide financial support if Aoxing Pharmaceutical requires additional funds to maintain its operations and to repay its debts.
|
o
|
Shaanxi Biostar is entitled to a management fee equal to Aoxing Pharmaceutical’s net profits and is obligated to assume all operation risks and bear all losses of Aoxing Pharmaceutical. Therefore, Shaanxi Biostar is the primary beneficiary of Aoxing Pharmaceutical.
|
March 31,
|
December 31,
|
|||||||
2014
|
2013
|
|||||||
Raw materials
|
$
|
401,851
|
$
|
423,192
|
||||
Work in process
|
106,094
|
93,125
|
||||||
Finished goods
|
146,383
|
224,530
|
||||||
Goods in transit
|
78,550
|
89,464
|
||||||
$
|
732,878
|
$
|
830,311
|
Buildings
|
30 years
|
Building improvements
|
30 years
|
Machinery & equipment
|
5-10 years
|
Furniture & fixtures and vehicles
|
5-10 years
|
March 31,
|
December 31,
|
|||||||
2014
|
2013
|
|||||||
Buildings
|
$
|
3,623,923
|
$
|
3,653,390
|
||||
Building improvements
|
2,999,474
|
3,023,864
|
||||||
Machinery & equipment
|
1,201,588
|
1,209,401
|
||||||
Furniture & fixtures
|
68,330
|
68,886
|
||||||
Vehicle
|
133,302
|
134,386
|
||||||
Construction in progress
|
2,133,578
|
2,150,927
|
||||||
10,160,195
|
10,240,854
|
|||||||
Less: Accumulated depreciation
|
(2,632,877
|
) |
(2,512,154
|
)
|
||||
$
|
7,527,318
|
$
|
7,728,700
|
Land use rights
|
50 years
|
Proprietary technologies
|
10 years
|
March 31,
|
December 31,
|
|||||||
2014
|
2013
|
|||||||
Land use rights
|
$
|
3,511,662
|
$
|
3,540,216
|
||||
Proprietary technologies
|
18,952,674
|
19,106,783
|
||||||
22,464,336
|
22,646,999
|
|||||||
Less: Accumulated amortization and
impairment
|
(6,086,145
|
) |
(5,512,505
|
) | ||||
$
|
16,378,191
|
$
|
17,134,494
|
Years Ending December 31,
|
||||
2014
|
$
|
1,720,920
|
||
2015
|
2,294,560
|
|||
2016
|
1,142,318
|
|||
2017
|
1,036,060
|
|||
2018
|
1,036,060
|
|||
Thereafter
|
9,148,273
|
March 31,
|
December 31,
|
|||||||
2014
|
2013
|
|||||||
Current portion
|
||||||||
a) Deposits paid for research and development of new medicine
|
$
|
2,069,167
|
$
|
2,781,323
|
||||
b) Deposits paid for purchase of inventory
|
283,273
|
654,429
|
||||||
c) Receivable from disposition of two drug approval numbers
|
-
|
1,390,661
|
||||||
d) Receivable from land use rights disposed in 2011
|
811,438
|
455,427
|
||||||
Other receivables
|
729
|
734
|
||||||
Deposits and other receivables
|
$
|
3,164,607
|
$
|
5,282,574
|
||||
Non-current portion
|
||||||||
e) Deposits paid for intended acquisition of a health product manufacturer
|
3,894,903
|
3,926,573
|
||||||
$
|
3,894,903
|
$
|
3,926,573
|
a.
|
Deposits paid for research and development less amounts recognized as research and development expense. In December 2010, the Company entered into an agreement with a research institution to jointly develop a new drug for treatment of cardiovascular disease. The development is to be carried out by the research institute. Pursuant to the agreement, the Company’s total commitment is about $11.5 million, in exchange for 60% share of the intellectual property upon successful development of the drug. In the event that the research institute fails to successfully develop the drug, the Company’s contribution is fully refundable.
|
b.
|
Deposits paid for purchase of inventory represents prepayments of inventory to one supplier.
|
c.
|
During the year ended December 31, 2013, the Company sold intangible assets relating to two drug approval numbers with a carrying value of approximately $0.2 million to an arm’s length party for approximately $1.4 million (RMB 8.5 million), resulting in a gain on disposal of approximately $1.2 million.
|
d.
|
During the year ended December 31, 2011, the Company disposed two land use rights reclaimed by local governments. As of March 31, 2014, approximately $0.8 million has yet to be received.
|
e.
|
In November 2013, the Company signed a letter of intent to acquire 100% interest in a health product manufacturer for an aggregate consideration of approximately $9.2 million (RMB 56 million), consisting of approximately $4.9 million (RMB 30 million) in cash and shares of the Company’s common stock valued at approximately $4.3 million (RMB 26 million), subject to the completion of a due diligence report and certain conditions set out in the letter of intent being met. The deposit is fully refundable if certain conditions set out in the letter of intent are not met.
|
For the year ended December 31, 2013
|
Shares issued
|
Value
|
||||||
i. issued in connection with the execution of the Weinan Supplemental Agreement, to acquire 13 drug approvals from the former equity holders of Shaanxi Weinan. (Note 1), valued at $0.85 per share, representing the fair value of the shares at the date of the execution of the Weinan Supplemental Agreement
|
1,602,564
|
$
|
1,362,179
|
|||||
ii. awarded to employees based on 2012 Incentive Stock Plan, fair value at $0.82 per share
|
750,000
|
613,647
|
||||||
iii. issued to two consulting firm corporate advisory services during the year, average fair value at $1.00 per share
|
110,000
|
110,550
|
||||||
iv. issued to a consulting firm and the consulting firm’s employees for an one year corporate advisory agreement from November 29, 2013, fair value at $1.81 per share
|
220,000
|
398,200
|
||||||
Total common stock issued during the year ended December 31, 2013
|
2,682,564
|
$
|
2,484,576
|
For the three months ended March 31, 2014
|
Shares issued
|
Value
|
||||||
v. issued to selected investors through public offering, valued at $2.49 per share less financing costs
|
1,650,000
|
$
|
3,862,533
|
|||||
Total common stock issued during the three months ended March 31, 2014
|
1,650,000
|
$
|
3,862,533
|
i) Common share | 1,650 | |||
ii) Warrant liabilities - note b)below | 960,894 | |||
iii) Additional paid-in-capital | 2,899,989 | |||
$ | 3,862,533 |
Outstanding as at,
|
||||||||||||
Expiry date
|
Exercise Price
|
March 31, 2014
|
December 31, 2013
|
|||||||||
June 30, 2014
|
$ |
8.22
|
10,784
|
10,784
|
||||||||
November 1, 2014*
|
9.00
|
166,667
|
166,667
|
|||||||||
March 12, 2017
|
3.23
|
759,000
|
-
|
|||||||||
936,451
|
177,451
|
Weighted Average
|
||||||||||||
Number of options
|
Exercise Price ($)
|
Remaining Life (years)
|
||||||||||
Balance, December 31, 2013
|
386,222
|
7.81
|
1.08
|
|||||||||
Balance, March 31, 2014
|
386,222
|
7.81
|
0.90
|
|||||||||
Vested and exercisable as at March 31, 2014
|
386,222
|
7.81
|
0.90
|
Three Months Ended March 31,
|
||||||||
2014
|
2013
|
|||||||
Basic earnings per share:
|
||||||||
Numerator:
|
||||||||
Net income used in computing basic earnings per share
|
$ | 306,670 | $ | 560,974 | ||||
Denominator:
|
||||||||
Weighted average common shares outstanding
|
13,024,446 | 9,993,549 | ||||||
Basic earnings per share
|
$ | 0.02 | $ | 0.06 | ||||
Diluted earnings per share:
|
||||||||
Numerator:
|
||||||||
Net income used in computing diluted earnings per share
|
$ | 306,670 | $ | 560,974 | ||||
Denominator:
|
||||||||
Weighted average common shares outstanding
|
13,024,446 | 9,993,549 | ||||||
Weighted average effect of dilutive securities:
|
||||||||
Stock warrants and options
|
6,197 | - | ||||||
Shares used in computing diluted earnings per share
|
13,030,643 | 9,993,549 | ||||||
Diluted earnings per share
|
$ | 0.02 | $ | 0.06 |
Sales risks concentration
|
|||||||||
Percentage of total sales during the
|
|||||||||
Customer
|
Three Months Ended March 31,
|
||||||||
2014
|
2013
|
||||||||
A |
30
|
%
|
17
|
%
|
|||||
B |
16
|
%
|
17
|
%
|
|||||
Total risks concentration
|
46
|
%
|
34
|
%
|
Three Months Ended March 31,
|
%
|
|||||||||||||||||||
2014
|
2013
|
change
|
||||||||||||||||||
Aoxing Pharmaceutical Products
|
%
|
%
|
||||||||||||||||||
Xin Aoxing Oleanolic Acid Capsule
|
$ | 5,077,309 | 38.6 | % | $ | 5,443,928 | 45.0 | % | (6.7 | ) % | ||||||||||
Other Aoxing Pharmaceutical products
|
2,971,494 | 22.6 | % | 2,502,174 | 20.6 | % | 18.8 | % | ||||||||||||
Sub-total
|
8,048,803 | 61.2 | % | 7,946,102 | 65.6 | % | 1.3 | |||||||||||||
Shannxi Weinan Products
|
||||||||||||||||||||
Shaanxi Weinan products
|
2,727,745 | 20.7 | % | 2,083,214 | 17.4 | % | 30.9 | % | ||||||||||||
Shaanxi Weinan products (new)
|
230,949 | 1.7 | % | - | 0.0 | % | n/a | |||||||||||||
Sub-total
|
2,958,694 | 22.4 | % | 2,083,214 | 17.4 | % | 42.0 | % | ||||||||||||
Hospital products
|
2,173,667 | 16.4 | % | 2,062,593 | 17.0 | % | 5.4 | % | ||||||||||||
Total sales
|
$ | 13,181,164 | 100.0 | % | $ | 12,091,909 | 100.0 | % | 9.0 | % |
Three Months Ended March 31,
|
%
|
|||||||||||||||||||
2014
|
2013
|
change
|
||||||||||||||||||
Aoxing Pharmaceutical Products
|
%
|
%
|
||||||||||||||||||
Xin Aoxing Oleanolic Acid Capsule
|
$ | 824,112 | 13.9 | % | $ | 1,367,670 | 25.3 | % | (39.7 | ) % | ||||||||||
Other Aoxing Pharmaceutical products
|
2,104,038 | 35.5 | % | 1,745,882 | 32.3 | % | 20.5 | % | ||||||||||||
Sub-total
|
2,928,150 | 49.4 | % | 3,113,552 | 57.6 | % | (6.0 | ) % | ||||||||||||
Shannxi Weinan Products
|
||||||||||||||||||||
Shaanxi Weinan products
|
1,239,245 | 20.9 | % | 895,723 | 16.6 | % | 38.4 | % | ||||||||||||
Shaanxi Weinan products (new)
|
188,223 | 3.2 | % | - | - | n/a | ||||||||||||||
Sub-total
|
1,427,468 | 24.1 | % | 895,723 | 16.6 | % | 59.4 | % | ||||||||||||
Hospital products
|
1,572,458 | 26.5 | % | 1,393,744 | 25.8 | % | 12.8 | % | ||||||||||||
Total cost of sales
|
$ | 5,928,076 | 100.0 | % | $ | 5,403,019 | 100.0 | % | 9.7 | % |
Three Months Ended March 31,
|
||||||||||||||||
2014
|
2013
|
|||||||||||||||
Gross Profit
|
Product Gross Margin %
|
Gross Profit
|
Product Gross Margin %
|
|||||||||||||
Aoxing Pharmaceutical Products
|
||||||||||||||||
Xin Aoxing Oleanolic Acid Capsule
|
$ | 4,253,197 | 83.8 | % | $ | 4,076,258 | 74.9 | % | ||||||||
Other Aoxing Pharmaceutical products
|
867,456 | 29.2 | % | 756,292 | 30.2 | % | ||||||||||
Sub-total
|
5,120,653 | 63.6 | % | 4,832,550 | 60.8 | % | ||||||||||
Shaanxi Weinan Products
|
||||||||||||||||
Shaanxi Weinan products
|
1,488,500 | 54.6 | % | 1,187,491 | 57.0 | % | ||||||||||
New Product
|
42,726 | 18.5 | % | - | n/a | |||||||||||
Sub-total
|
1,531,226 | 51.8 | % | 1,187,491 | 57.0 | % | ||||||||||
Hospital products
|
601,209 | 27.7 | % | 668,849 | 32.4 | % | ||||||||||
Total gross profit
|
$ | 7,253,088 | 55.0 | % | $ | 6,688,890 | 55.3 | % |
Three months ended March 31,
|
||||||||||||||||||||
2014
|
2013
|
|||||||||||||||||||
Operating expenses
|
% of net sales
|
Operating expenses
|
% of net sales
|
% change
|
||||||||||||||||
Advertising expenses
|
$ | 1,788,541 | 13.6 | % | $ | 1,886,681 | 15.6 | % | (5.2 | %) | ||||||||||
Selling expenses
|
1,934,722 | 14.7 | % | 2,197,346 | 18.2 | % | (12.0 | %) | ||||||||||||
General and administrative expenses
|
3,597,993 | 27.3 | % | 1,077,748 | 8.9 | % | 233.8 | % | ||||||||||||
Research and development expenses
|
694,944 | 5.3 | % | 796,001 | 6.6 | % | (12.7 | %) | ||||||||||||
Total operating expenses
|
$ | 8,016,200 | 60.8 | % | $ | 5,957,776 | 49.3 | % | 34.6 | % |
1.
|
If after taking legal action, it appears that an accounts receivable is not likely to become collectible, such accounts receivable will be written off if it is more than two years old.
|
2.
|
If during the collection period, the customer provides bankruptcy or other insolvency documentation, the corresponding accounts receivable will be written off.
|
3.
|
If we are no longer able to locate a particular customer in order for us to take any collection or legal actions, the accounts receivable for such customer will be written off if it is more than two years old.
|
Payments due by period ($ million)
|
||||||||||||||||||||
Total
|
Within 1 year
|
1-3 years
|
3-5 years
|
>5 years
|
||||||||||||||||
Research and development contracts
|
0.8
|
0.8
|
-
|
-
|
-
|
|||||||||||||||
Purchase of a health product manufacturer
|
5.3
|
5.3
|
-
|
-
|
-
|
|||||||||||||||
-
|
-
|
|||||||||||||||||||
Total contractual obligations
|
$
|
6.1
|
$
|
6.1
|
$
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BIOSTAR PHARMACEUTICALS, INC.
(Registrant)
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Date: May 15, 2014
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By:
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/s/ Ronghua Wang
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Ronghua Wang, Chief Executive Officer and President
(Principal Executive Officer)
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Date: May 15, 2014
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By:
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/s/ Qinghua Liu
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Qinghua Liu, Interim Chief Financial Officer
(Principal Financial and Accounting Officer)
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1 Year Biostar Pharmaceuticals (CE) Chart |
1 Month Biostar Pharmaceuticals (CE) Chart |
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